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Megatrends

The energy sector is characterised by long-term planning, many years ahead. In this chapter, we want to show the trends that we are taking into consideration when planning our development.

Most of the energy in Poland (85%) is generated at utility thermal power plants. In this group, 70% of boilers and 2/3 of turbosets are over 30 years old, meaning that many of these units are getting close to the end of their lifecycles. Naturally, this is an opportunity to bring in new technologies, more efficient and more eco-friendly. This is also an opportunity to diversify the system's fuel and technology mix.

ENERGY SECTOR TRANSFORMATION

LEGACY (YESTERDAY)

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ENERGY OF TOMORROW

Increase in energy demand correlated with GDP growth

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Increase in energy demand less predictable, more abrupt. Pressure on efficiency

(In accordance with Directive 2009/28/EC on the promotion of the use of energy from renewable sources, EU member states have to achieve percentage targets for renewables in gross energy consumption by 2020. Poland's target is 15%)

Conventional plants compete with renewable sources which have priority of reception for its output and also financial support scheme. Two commodity energy and capacity market enumerates also readiness to work.

The development of renewables brings changes in model of the power market and the way that conventional generation units operate. Lower load factor means that volume based remuneration will not be sufficient to cover full costs of generation units. The decline of profitability may cause losses of capacity in the system and the shortage may be perceivable in periods when weather driven supply is missed. The readiness to operate is the service that has the real value for the economy.

Energy as a good that cannot be stored (basic rule on wholesale energy markets, which explains intraday price volatility)

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R&D budgets are being directed at energy warehousing technologies, progressing commercialisation of energy warehousing on an industrial scale.

Automotive industry based on crude oil, as element of surrounding

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Electricity-based automotive (electric vehicles as additional source of demand). Potential for EVs to stabilise the system around the clock

Simple consumption model for energy

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Smart homes, smart grids and the Internet of Things, in which devices exchange information needed to optimise energy consumption.

Poland as part of integrated European market, growing volume of cross-border exchange

We are not arguing with the direction of transformation but we want the transformation from the traditional model to the future model to be harmonised, thought-through and coordinated.

How do we do this?

Subsidising renewables and the prosumer's dilemma

As technology becomes popular, it also becomes more efficient and cheaper. But in the development phase, new technologies must be supported. Support systems are financed from fees for energy paid by all customers. Prosumer energy, while representing one of mega trends related to dispersed generation, utilizes support financed by the whole society.

Increasing changes in surroundings

The increasing dynamics of changes in surroundings influences the volatility of electricity prices. One of conclusions from Company’s strategic analysis is the need for increased flexibility.

Reasons for changes - including:

technological changes (development of renewables and implications for the fossil fuel market),

in the future: demand for energy from electric cars and partial substitution of oil

weather conditions - weather has impact on demand and supply, determines wind- and sun-based generation; also the freezing and later melting of hydro plants, high temperatures, low water levels in rivers all create risks for cooling conventional power plants,

changes in fuel production structure: (depletion of old deposits, discoveries of new resources)

progress in telecommunications, integration of financial markets and global swings